Jul 212020

Over the years, many of the articles posted on this site have been designed to illustrate that history does, in fact, repeat itself. Much of what has just taken place in the beer industry has roots in the past. In other words, the industry has “been there and done that!” Recent articles within the industry have interviewed beer veterans, and many have had similar comments: “In all my years, I have never seen the industry in this situation.” This is true based on the fact that most of these individuals were not around in the late 1960s or early 1970s. The Covid-19 crisis has created shortages of brands and packages. Imports, especially Mexican imports, have had shortages created by the shutting down of breweries. The pandemic ramped up so quickly that wholesalers and importers did not have time to build their inventories.

In the summer of 1969, AB brewery workers decided to go on strike, and in just a matter of days, the market was out of Budweiser products, both packages, and draft. Remember, there was no Bud Light at this time. While in college that summer, I worked for a Coors distributorship. Coors, which was not on strike, dominated the market share in the 10 other states where they were selling. Because Budweiser had been depleted of their inventory, and the demand for Coors became greatly heightened, they, too, were running low on inventory and had to allocate beer.   Employees would arrive at the warehouse each morning to find the place empty; similar to what is occurring in today’s warehouses. Trucks filled with Coors, having been loaded the previous night as the train cars were spotted and then unloaded, were ready for delivery. Each retailer received only 10% of their previous year’s order. The amount of product was noted on a computer printout obtained by the driver/salesman. Needless to say, many retailers were upset that they could not get the supply of Coors that they had requested. In protest, some retailers covered their windows with butcher paper while others simply told the D/S to leave, thus making things easier on Coors as that allotment of beer could then be sold to the next retailer.

In 1969, Pearl was the largest selling beer in Texas. It was Schlitz, however, that took advantage of the Budweiser strike and soared to the number one sales position in the state. The subsequent summer, AB brewery workers again went on strike and 1970 became a repeat of the previous year. While the summers of ‘69 and ‘70 were not like today’s pandemic-created environment, both situations created out-of-stocks.  This is especially the case in bars where kegs have virtually disappeared, just as they did 50 years ago when we could sell every case on the truck and not have to rotate stock as the stores were consistently out of beer.

Following the summer of 1970, many regional beers went out of business. The same is happening today in the craft market. Fifty years ago, those breweries that were able to hang on, lost market share to the national brands and when AB’s strike ended, the monster brewery returned aggressively.  In our current environment what is accelerating is the seltzer segment, and like the situation with light beers, which were testing in 1971, once that new segment became a hit, sales skyrocketed. We can see a similar situation in today’s seltzers.

We can make the case that this period in history is not the same as the AB strike in 1969-1970, however, just as happened after 1970, once the virus is conquered, the industry will be changed. Count on it! Maybe we will relive another beer shortage 50 years from now, but I am pretty sure I will miss that one!

Everybody has a plan until they get hit in the mouth.

 Posted by at 6:00 am
Jul 162020

This writing begins the ninth year of BeerBusinessUnplugged posts. For the past eight years, the posts were a weekly occurrence, but as of January of this year, they became monthly.

Needless to say, this year has produced more disruption in the industry than in any year past. In 2019, despite the tremendous growth of the seltzer segment, concerns proliferated over whether or not seltzers were simply a seasonal summer beverage, or would the surge in popularity be more of a spike and crash occurrence. Fast forward to 2002 and the seltzer segment continues to grow at a phenomenal pace. It seems there is no ceiling.

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And now, of course, we are dealing with the Coronavirus. Though each state is handling business openings differently, several large beer-consuming states, including Texas, Florida, Arizona, California, and Illinois are either pushing back their openings or totally closing bars and restaurants. As we saw this spring, such action causes massive issues with kegs and on-premise accounts. Although the industry is attempting to get a handle on the future of beer sales, the rules are constantly changing, thus making it almost impossible to develop such plans.

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The most-read post to date, Success and Failure are Both Part of Life. Neither are Permanent, was written on February 19, 2019. Despite moving from weekly to monthly posts, the number of reads is now close to 170K. Your comments and thoughts are greatly appreciated. I will write and post when a topic is of importance.

Thank you for reading and stay well.

Following is this year’s nostalgic Schlitz commercial.

 Posted by at 6:00 am